Is it a good time for first home buyers to get into the property market?
You’ve probably heard people talking about the potential to get a good deal on property at the moment, and you might be feeling like it’s time for you to take the plunge and buy your first place. But don’t just take your uncle’s word for it – we take a look at the real property market situation and explain why this could be your window of opportunity.
Low interest rates
Interest rates are currently the lowest they have been for a long time. This means that you could potentially pay off your mortgage faster if you take one out now, with lower home loan repayments that are friendly for your budget.
Choosing a fixed rate loan will also mean that you can lock in this lower rate for the life of your mortgage; although beware that it is possible for rates to drop even lower in the future, and a fixed rate means you’ll be stuck with your current rate regardless.
Remember, a low interest rate isn’t the only thing to look for in a home loan. Compare home loans here.
The government is giving first home buyers a helping hand at the moment, and it could be a good idea to take advantage of this while it lasts. The First Home Loan Deposit Scheme is a new initiative that allows first time home buyers to pay a very small deposit, as low at 5%.
Considering that people trying to buy their first properties often have to save up to 20% for a deposit, this is a great advantage and means the barrier to entry is a lot lower than it has been in the past. The scheme also allows first home buyers to avoid lenders mortgage insurance (LMI), which is usually required for smaller deposits.
First Home Owner Grants are another good government initiative for people wanting to get a foot on the property ladder. These grants are set up by individual states and territories, and so where you live will affect the kind of assistance you receive. First Home Owner Grants are a one-off lump sum payment that help you get enough money together for your first home. It’s worth noting that this grant is only for people who are buying a home to live in – you can’t use it to purchase an investment property.
COVID-19 affected market
No one could have predicted the coronavirus pandemic and the property market is still recovering from the hit to the nation’s economy. But one silver lining may be that first time home buyers have greater negotiating power at the moment.
Depending on where you are looking to buy, and what kind of property you’re looking for, there may be the opportunity to pick up a bargain. For example, Melbourne’s property market fell by 4.6% during the pandemic, as ongoing lockdowns impacted the city.
Additionally, the experience of working from home has made some people reconsider their inner city apartment living conditions. As these people decide to sell up and move out to more spacious homes in the suburb, these apartments may be in high supply and easier to purchase for first home buyers.